When is Refinancing Worth it?

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It has been said that only in the case your new interest is at least two points under your current rate, should you refinance your mortgage. That may have been accurate years ago, but as refinancing has been costing less recently, it is never the wrong time to think about a new loan! Refinancing your loan has various benefits that can make it worth the up-front expenditure a few times over.

Benefits

When you refinance, you may have the ability to lower your interest rate and monthly mortgage payment amount, perhaps considerably. You might also have the ability to "cash out" some of the built-up equity in your residence, that you are able use to consolidate debts, make home improvements, or finance a vacation. You might have the option to refinance into a shorter-term mortgage program, giving you the ability to add to your equity quicker.

Expenses and Fees

All these advantages do cost something, though. When you refinance, you're paying for basically the same things you were charged for during your original mortgage loan. Included in the list can be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.

Do the Math

You might consider paying points to receive a better interest rate. Your savings over the life of the loan could be significant if you've paid up front about 3% of the new loan total. You may hear that points may be tax deductible, but as tax regulations can be ever-changing, please consult a tax professional before considering this in your calculations.

Another thing about taxes is that if your interest rate is reduced, naturally you'll also be lowering the paid interest amount that you'll be able to deduct on your federal income taxes. This is another expense that some borrowers consider. Call us at 5623200510 to help you do the math.

In the end, for most people the amount of initial costs to refinance are paid back soon in monthly savings. We'll help you determine which mortgage program is ideal for you, considering your cash on hand, how likely you are to sell your house in the next few years, and how refinancing will effect your taxes. Call us at 5623200510 to get you started.

Curious about refinancing your home? Give us a call at 5623200510.

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Reliance Mortgage Service, Inc

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